Government Support Needed to Build Fintech Ecosystem in Canada

Government Support Needed to Build Fintech Ecosystem in Canada

To underscore its vision of positioning Canada as a global hub in FinTech, The Digital Finance Institute and McCarthy Tetrault LLP have released a comprehensive report on the prospects of FinTech in Canada and 16 other countries.

FinTech in Canada: British Columbia Edition invited various FinTech stakeholders, such as banks, tech and law firms, agencies, and startups to share their views on what is needed to make Canada a leader in FinTech. It further emphasized Canada’s capacity to change and improve its financial services by looking at the growing components of Canada’s FinTech ecosystem. Additionally, because FinTech is a growing sector in B.C.’s tech industry — and also the headquarters of the DFI — the report focuses heavily on the Vancouver’s prospects of growth and improvement in relation to FinTech.

“The aim of this FinTech Report is to provide thought leadership that changes our trajectory so that Canada becomes an international leader in FinTech,” said Christine Duhaime, the executive director at the DFI. When looking at what startups need to succeed in Canada, stakeholders said startups require three components: Access to funding, attracting and retaining talent, and government support. The overall sentiment from most stakeholders was that Canada ranks between moderate to high in terms of supporting startups, but there is room for improvement. Stakeholders said that funding, engagement, policy initiatives and support from the Canadian government for FinTechs in Canada can help the country become an international leader.

“National stakeholders noted that in the international FinTech landscape, Canada does not have a high profile, which impacts the ability of Canadian FinTechs to access international markets,” the report said. Innovate Finance, the UK-based FinTech trade association supported by the government, noted that early engagement with financial institutions, startups, and tech providers is critical to support responsible innovation.”

The report further explores Canada’s potential to become a leader in the larger, international FinTech community. According to the report, the global financial services sector is undergoing significant changes as the world becomes more digitized and automated. This is expected to cause shifts and shrinkages in employment in the financial services sector, and with employment in the traditional financial services roles is shrinking rapidly, Canada and its FinTech ecosystems have a great economic opportunity to emerge as FinTech centres by adapting to these global changes. The report states that “Canada’s FinTech ecosystems present a powerful national opportunity, in particular, if it can coalesce into a unified international presence.”

The report presents that collaboration among FinTechs can build Canada’s presence as a FinTech leader. It indicates that Vancouver, being a central hub for FinTechs in Canada, has a small, yet collaborative FinTech ecosystem as it offers a unique lifestyle appeal to talented professionals, and its proximity to the Silicon Valley and Asian markets allow for collaboration and financing. Despite this, stakeholders agree that other FinTech ecosystems in Canada, including Ottawa, Waterloo, Vancouver, and Toronto should work on building a larger, national collaborative ecosystem. One suggestion they offered for this is hosting more conferences to build relationships and network, and giving stakeholders opportunities “to share knowledge and foster a culture of innovation and collaboration.”

“Such initiatives promoting and highlighting diversity in FinTech help support Canadian entrepreneurs and innovators, generate goodwill for Canada’s FinTech sector and help to create alliances with financial services sector globally,” said the report.